NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Legal Structure of Mutual Funds in India
A mutual fund AMC has a board of 9 directors. Under SEBI regulations, what is the minimum number of directors who must be independent, i.e. not associated with the sponsor, trustee or their associates?
At least 5 directors must be independent. SEBI requires that at least 50 percent of an AMC's board be independent of the sponsor, trustee and associates. Half of 9 is 4.5, which rounds up to 5 as the minimum whole number.
- A3
- B4
- C5Correct
- D6
Explanation
SEBI requires at least 50 percent of the AMC's directors to be independent of the sponsor. Half of 9 is 4.5, so the minimum whole number is 5. A figure of 3 reflects one-third and 6 reflects two-thirds, which are the wrong thresholds here.
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